Any closure of Malaysia Airlines will have disastrous spillover effects that cut across the company’s ecosystem worldwide, a former senior executive of the national carrier warns in the wake of remarks by the airline’s CEO that a shutdown could be around the corner if creditors reject the management’s restructuring plan.
“We’re not talking about a pittance. We’re talking about saving the airline,” the former finance director who spent 20 years with the airline told MalaysiaNow.
The comments by Malaysia Airlines CEO Izham Ismail came amid reports that funds from the airline’s owner Khazanah Nasional have depleted to US$139 million – barely enough for it to stay afloat until the end of the year.
Malaysia Airlines is said to be burning through US$88 million each month, money from Khazanah that has kept the company alive through a massive restructuring exercise following the twin disasters of MH370 and MH17 in 2014.
That restructuring ensured that the airline could continue operating for the next six years, albeit on a super-lean structure.
The former executive said closing down the airline entirely would “invite greater socio-economic problems”.
“I’m sure Khazanah doesn’t have deep pockets but there has to be a balance between financial costs and other considerations,” he said.
He added that Khazanah’s first consideration in any refusal of funds should not be the risk aversion of stakeholders to a lack of future returns.
But there has been little optimism about the airline’s future even from the government.
Last week, Finance Minister Tengku Zafrul Tengku Aziz said Putrajaya would not bail out the company, or AirAsia, the other local airline which has been suffering from the impact of Covid-19 on the aviation industry.
“There has to be a balance between financial costs and other considerations.”
Nonetheless, given the backdrop of the ravaging effects of the pandemic, the government’s refusal and Khazanah’s reluctance are understandable.
The company currently employs 12,000 people in 53 cities.
But it’s not just about saving the staff, the former senior executive said.
“What about the suppliers? There are so many of them. It’s not a straightforward, clear-cut decision. The airline supports an entire ecosystem of stakeholders.”
He said any rescue plan for a company such as Malaysia Airlines must also take into consideration the social aspect.
He paints one scenario.
“Malaysia depends on tourism, to a large extent. If we’re depending on tourists to come with other airlines, the other airlines can cut their services any time.
“You cannot depend on other airlines, because they can bypass you any time.”
And then there is the impact on airports nationwide, which could turn into white elephants if the country’s main airline closes shop.
“Travel and cargo agents will be out of business. The food suppliers, big and small, will have no choice but to scale down. We are talking about huge numbers of Malaysians and employees out of jobs.”